Wall Street Should Send the Nation to College

Larry Harris Jr., The Huffington Post

I like Bernie Sanders because he is straightforward. He does not care for Wall Street very much and thinks we did them a huge favor by bailing them out in 2008. To pay for his plan for tuition-free public colleges he argues that Wall Street should pay a small speculation tax on stocks, bonds and derivatives — an idea that has already come to fruition in countries like the United Kingdom, France, Brazil, India, Switzerland, South Korea and China. He says, right to the point, we bailed them out now they will bail us out.

Lloyd Blankfein — Goldman Sachs CEO — called Sanders &quot;dangerous.&quot; Goldman Sachs, the largest purchaser of credit default swaps from AIG, got two bailouts for the record — one from the government and one from AIG. Sure, companies on Wall Street like Goldman Sachs ran our economy into the ground, but Sanders is the dangerous one. Sanders’ financial transaction tax would actually help prevent crises like Goldman Sachs helped cause by reducing volatility in trading. Countries with this tax in place before the 2008 financial crisis were some of the least effected by it.

Sanders’ College for All Act calls for the federal government to provide 67 percent of the cost of tuition-free public colleges and asks the states to pay the remaining 33 percent. So, it is likely that not all public colleges will actually be tuition-free even if Sanders’ entire plan is enacted. Instead, states friendly to the idea will opt in to the plan and make their public colleges tuition-free — much like the funding of the Affordable Care Act’s Medicaid expansion. So, students that live in the states that opt in and students who migrate to establish citizenship in states that opt in will have access to tuition-free public colleges. All accomplished without raising taxes on everyday Americans by one dime.

It is unclear how Wall Street will react to Bernie’s speculation tax. His proposal calls for a .5 percent tax on stocks trades, a .1 percent tax on bond trades and a .005 percent tax on derivative trades. Every $10,000 of stock trades would result in the government collecting $50. This is done to discourage high-frequency trading, which generates billions of dollars for certain investors. High-frequency trading also has been accused of giving an unfair advantage in the market to large trading firms.Critics of Sanders’ plan point out that Wall Street may shift to investing through options and find other ways around the tax. However, in 2011 forty countries had a version of Sanders’ financial transaction tax in place and it raised $38 billion. His tax can raise money and if successful will provide a valuable service to the nation.

The world of finance, of course, crows at the idea of a financial transaction tax. Bankers see the idea as one of naïve idealists who do not understand the inner workings of financial institutions. However, it is the oldest tax still in existence in the United Kingdom, was advocated for by economist John Maynard Keynes himself and even existed in the United States up until 1966. Sanders’ plan is grounded in reality. Countries all over the world have or are adopting a tax similar to his Wall Street speculation tax. We should put ours back in place at Sanders’ recommended taxation levels.

All or some college is a necessity in most people’s lives in the United States. A high school degree is no longer sufficient. So, it is the responsibility of the nation to properly prepare it’s human capital for production and prosperity. College must be an option for anyone in this country who wants a degree. And, with outstanding student debt at a staggering $1 trillion, it is clear that the cost of college is out of control. Bernie Sanders found a way to make tuition-free public college a reality with a common-sense approach. Like all of his plans, tuition-free public college is paid for without raising taxes on average Americans. Bernie doesn’t want you to pay more taxes. He wants those who do not pay enough to pay their fair share in taxes. A Wall Street speculation tax to pay for tuition-free college is fair. Indeed, we did bail them out at a time when they were in great need. And, now it is time for them to return the favor.

Back in the 1980's, then President Reagan's budget director David Stockman coined the phrase "strategic deficit" to describe the usefulness of creating long-term budgetary shortfalls to legitimize cutting programs that the 1% wanted to do away with. ... See more

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The Robin Hood Tax is a tiny financial transaction tax on Wall Street (less than one half of 1%) that could generate $300 billion annually. It will kickstart the economy by funding College For All, creating jobs, and strengthening public services like healthcare, education, and infrastructure at home — while tackling AIDS, global health, poverty, and climate challenges around the world.